CORPORATE OFFICERS CAN NOW OPT OUT OF UNEMPLOYMENT INSURANCE COVERAGE

BOISE, Idaho, July 15 -- The Idaho Department of Commerce & Labor issued the following news release:

An administrative order signed by Idaho Department of Labor Director Roger B. Madsen clears the way for corporate officers to terminate their coverage under the unemployment insurance program.

The department is notifying Idaho's 30,000 corporate officers that they can immediately terminate their coverage rather than wait until January. Termination now would preclude the payment of unemployment insurance taxes on corporate officer wages for the final two quarters of 2011.

The administrative order synchronizes the opt-out provision with new requirements for corporate officers to be eligible for unemployment benefits.

The opt-out form and instructions for filling it out are available on the Internet at http://labor.idaho.gov/dnn/idl/UnemploymentInsurance/UITaxes/tabid/682/Default.aspx.

Effective July 1 under House Bill 80, which was overwhelmingly approved by the 2011 Legislature, corporate officers in Idaho with ownership interests in their companies will be required to show that they are not legally associated with the company any more to be eligible for unemployment insurance benefits.

Corporate officers choosing to remain covered by the program will be subject to the new requirements. They must show they are no longer legally associated with the businesses through proof of sale of the corporation, dismissal by the board of directors, formal dissolution, a sworn affidavit that the corporate has been administratively dissolved or some other method. Those who collect benefits would also be required to repay those benefits if they resume working for the company within a year of qualifying for benefits.

Corporate officers who chose to end coverage will no longer pay the state unemployment insurance tax on their wages. They will remain liable for the federal unemployment insurance tax, and by opting out of state coverage they will lose the annual federal tax credit. Assuming corporate officers make at least $7,000 a year, those opting out will see their federal tax liability rise from $42 to $434 a year.

Decisions to opt out made through Dec. 15 will stand through 2012 and 2013. Corporate officers will be given the opportunity to reconsider their coverage decision every other year.

Similar provisions have been adopted by Alaska, California, Delaware, Hawaii, Iowa, Michigan, Minnesota, New Jersey, North Dakota, Oklahoma, Oregon, Texas, Washington and Wisconsin.

The legislation addresses two issues including concerns voiced by some corporate officers that they are required to pay unemployment insurance taxes on their salaries even though they have no intention of ever collecting benefits and corporate officers who use the unemployment insurance program to sustain their businesses during slow periods.

From the fourth quarter of 2007, when the recession began, to the first quarter 2010, nine months after the recession ended, 5,200 corporate officers of Idaho companies collected over $42 million in benefits after paying only $5.8 million in taxes on their wages. In fact all 30,000 corporate officers only paid $35 million in taxes on their salaries during that period. For any query with respect to this article or any other content requirement, please contact Editor at htsyndication@hindustantimes.com

Bob Fick, 208/332-3570, ext. 3628; Josh McKenna, 208/332-3570, ext 3919.